Are Rising Rates Good For Stocks?

Many investors believe the popular misconception that higher rates are immediately bad for stocks. Would most investors change their outlook if they were aware of how long it took in a raising rate cycle before stocks and the economy reacted?

From "Blain’s Morning Porridge" by Bill Blain of Mint Partners
“We can work with fear.”
Interesting markets. Again. Tomorrow the Fed will Hike US rates by 25 basis points. The sell-off in Tech continues. The limited reaction to the UK Election howler continues to suggest we’re still short on understanding what it all means. European banks and financials continue to surprise.

5 Key Charts Show Rising Interest Rates Good For Gold Bullion Gold fell to the lowest level in dollar terms since 2009 yesterday after the Fed’s “historic” 25 basis point interest rate rise on Wednesday. The rate hike has been heralded as the “end of cheap money.” This may or may not be the case but what is more important for precious metal buyers is the impact of potential rising rates on gold prices.

Reuters / Richard CarsonThe S&P 500 is up 9% so far this year, and it would like to thank its most trusted allies: high-flying tech stocks.
But the benchmark's reliance on mega-cap tech has come at a price. Market pessimists have frequently cited the highly-concentrated gains as a negative driver, arguing that while the ride higher is enticing, any unwinding can be swift and brutal.

Doug Carey submits:The interest in the stocks of companies paying higher than average dividends has been in a rapid upswing over the past couple of years as it has become readily apparent that short-term interest rates are not rising any time soon. Ben Bernanke has all but promised us years of low short-term rates. With money market funds paying less than 0.1% on average, many investors are turning to high-dividend paying stocks to supplement their income.

The chart above shows the extent of what has become an amazing development in global markets in 2013: favor has turned toward European equities in a big way after years of what have mostly been outflows from the asset class.

Palladium prices have reached their highest versus gold in more than two years this week as a rally in risk assets boosts the appeal of industrial commodities, with further rises likely as the economic recovery gains impetus.
The ratio of gold to palladium slid to 1.81 on Monday, its lowest since March 2011, as firm U.S. jobs data fuelled hopes the U.S. recovery is on track, and after Standard & Poor’s revised up its sovereign credit outlook for the United States.